Business Context and Reporting Period
Skillsoft Corp. filed this Form 8-K on December 22, 2021, regarding its proposed acquisition of Codecademy. The filing is transaction-focused and does not report operating results for a specific financial quarter or year.
Transaction and Key Financial Terms
- Skillsoft entered into an Agreement and Plan of Merger with Codecademy and related subsidiaries and representatives.
- Codecademy equity holders are to receive aggregate consideration consisting of $204.9 million in cash and $320.1 million in Skillsoft common stock, subject to adjustments, holdbacks, and the agreement’s stock-price collar.
- The stock consideration will be based on a 15-trading-day volume-weighted average price measured at specified dates before signing and closing.
- Consideration may be paid in cash, Skillsoft common stock, or a combination, depending on the holder category. Certain equity awards will be converted into cash or Skillsoft restricted stock units.
- Skillsoft obtained a debt financing commitment for up to $160.0 million of senior secured incremental term loans. Proceeds are intended to fund part of the acquisition consideration and related fees and expenses.
- The filing does not provide current revenue, profit, cash flow, margin, total debt, cash balance, or liquidity figures.
Material Changes Versus the Prior Comparable Period
The filing does not present period-over-period financial results. The material development is Skillsoft’s signing of the definitive agreement to acquire Codecademy and its related financing commitment.
Conditions, Outlook, Risks, and Unusual Items
- Closing is subject to Codecademy and Skillsoft stockholder approvals, NYSE approval for the share issuance and listing, HSR clearance, CFIUS clearance, the absence of prohibitive laws or orders, and customary representations, warranties, and covenant conditions.
- The transaction is expected to close by June 22, 2022, with an automatic extension to July 22, 2022 if regulatory approvals are the only remaining conditions.
- The agreement may be terminated under specified circumstances, including failure to close by the applicable outside date, injunctions, uncured breaches, failure to obtain required approvals, or a material adverse effect.
- Skillsoft may owe Codecademy a $6.0 million termination fee in certain termination scenarios.
- Skillsoft obtained representation and warranty insurance and agreed to an additional indemnification escrow for specified matters.
- Key risks include failure or delay in obtaining approvals, inability to arrange financing, failure to realize expected acquisition benefits, integration difficulties, transaction-related costs and impairments, disruption to operations, leverage and liquidity constraints, restrictive debt covenants, cybersecurity and technology risks, COVID-19 impacts, competition, and the ability to retain personnel.
- Management’s transaction-related statements are forward-looking and subject to substantial uncertainty; the filing does not provide quantified acquisition synergies or earnings guidance.
Important Facts for Investors to Verify
- Review the definitive merger agreement and subsequent proxy statement for the final consideration mix, share count, adjustments, holdbacks, and closing conditions.
- Confirm whether Skillsoft stockholders approve the required issuance of common stock and whether NYSE, HSR, and CFIUS clearances are obtained.
- Verify the final amount, pricing, maturity, covenants, and funding conditions of the proposed $160.0 million incremental term loan.
- Monitor the transaction’s closing date, any extension or termination, and potential payment of the $6.0 million termination fee.
- Assess post-closing leverage, liquidity, integration costs, impairment charges, and the realized financial contribution of Codecademy in subsequent filings.